The Commission has also ended the limitation on per hour advertising minutes. Their only other option is to cancel their BDU service and receive local TV off air while sacrificing every other service. This is no choice at all. Let us be perfectly clear. All stakeholders in this industry support local TV. Broadcasters hold no monopoly in that regard.
They shutter local stations.
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They argue that the new status quo which requires them to deliver less programming is the most that can be expected of them. Yet, they seek new revenue sources to fund these reduced local content obligations. No commitments after being rejected twice on fee for carriage, after the Chairman's Langdon Hall speech and despite the clear indication in the public Notice.
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They argue for more from others and less of themselves. We contribute millions of dollars to local expression. Fair compensation is also provided in cash and kind to broadcasters for distance signals and Bell TV has offered to limit the number of distant signals that a subscriber can receive. Therefore, through time shifting, the broadcaster is able to capture viewers for the benefit of its advertisers and itself where it otherwise would not have captured that viewer at all.
Fecan tell of the principal virtue of his online service at ctv. We therefore question the public policy rational for such an arrangement.
What is required is a different way forward and we have a bit more to say on this at the end of these remarks. Chairman, Mr. Vice-Chairs and Commissioners. The broadcasters claim that Canadian programming and local programming in particular are money losers. They say that U. This is the fourth hearing to consider either fee for carriage or value for signal, yet there is still no broadcaster commitment for more or better local programming. No commitment either to keep local TV stations open. So what is the nature of this local programming?
It can therefore be argued that saving local TV will only preserve an hour or so of daily news programming. But even this overstates the situation.
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This means that less than one-half of the local news hour is actually local. We confirmed this by analyzing the six p. Underpinning this argument is the notion that broadcasting licences come with a profit guarantee.
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This is clearly unfounded. At Bell TV we know that firsthand; that there are no profit guarantees. DTH has added hundreds of millions in net new revenue to Canadian broadcasting. It has created massive public policy benefits and it is the main reason that the conversion of the BDU industry from analog to digital is now taking flight.
Given the recession that has dragged down nearly every sector of the economy, the Bank of Canada, TD Bank Financial Group, Bank of Montreal and other experts report that the economy has now hit bottom and is beginning to rebound. So too is advertising spending. The evidence and the data are clear on this.
This is a puzzling argument for the broadcasters to make because they are in fact trying to duplicate their current business model on the internet. They do so to attract online advertising revenue and to bolster their conventional TV business. This advertising-based business model -- if the advertising-based business model is broken then why would the broadcasters today seek to extend it to a new platform like the internet?
In fact, advertising-based business models remain widespread and they are aggressively expanding everyday. This is why we are already working with these very broadcasters to find innovative ways to use the internet and VOD to each of our mutual benefits. If slow revenue growth was a trigger for government intervention, then every Canadian company affected by the recession or in a slow growth industry would be lining up for government subsidies. Viewers have clearly shifted some of their viewing from conventional television to other forms of broadcasting but this is to be expected in light of the growth in television viewing options.
In fact, more than half of all specialty TV revenues and profits find their way to conventional broadcasters' income statements. In the last five years conventional broadcasting revenues have actually increased by an enviable 3. However, operating expenses over this same period have increased almost five times as fast. And this is the cost of falling profit margins. But this need not be the case. Between and Bell's local and long distance revenues declined by 27 percent. This is a severe contraction by any measure and it is a secular change, not a cyclical change like the advertising business.
Since we have reduced our workforce by more than 10, employees including a reduction of 2, management positions in alone. Canadians have more sources of local news and information today than they have had at anytime in history. BIBIC: The government and the Commission have already made extensive accommodations to provide financial relief to conventional broadcasting. To that end we recommend the following measures; adopting Freesat, implementing group-based licence renewals, providing broadcasters with additional programming flexibility and exploring new revenue opportunities by monetizing the local avails and VOD distribution.
The proposal has yet to gain traction among broadcasters clearly because they hope to win further concessions from the Commission. But we believe that Freesat is a win for all concerned, especially consumers. There has been no alternative proposal that even comes close to Freesat. This is wrong. The antenna and set-top box purchased by a Freesat customer would be designed to receive signals from these satellites.
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In contrast, the majority of our current customer base lacks the antenna and set-top box equipment necessary to receive signals from both satellites. To require the majority of our customers to upgrade their equipment to receive the local signals they do not currently have would be highly disruptive to them and expensive for Bell TV. Added administrative and operational flexibility is always desirable and we can certainly speak to that firsthand as an incumbent Telco whose regulatory rules on the retail side were recently relaxed.
Access to avails' advertising could be restricted to OTA broadcasters as another way of bolstering their bottom lines. Nevertheless, the broadcasters and other BDUs should explore win-win, video-on-demand models and we hope to engage on this issue in the future as well. Allowing these accommodations to take hold and yield results gives the Commission the time needed to address the underlying policy question faced by the industry.
That is the future of local programming. Chairman, we take every regulatory proceeding rather seriously so we approach each and every one with the sincere objective of trying to be constructive, trying to come forward with analytical frameworks and solutions which advance the public interest generally, promote good regulatory practices specifically, understandably all the while trying to advance our own business interests which we obviously have to do. We really do believe that that will pave the way for meaningful negotiation between BDUs and broadcasters on a number of issues, leading to a win-win resolution.
And this is what we would do if we were in the Commission's shoes. I know you take our hearings very seriously and you always come forward with well thought-out submissions, trying to advance the cause. Whether we agree or not agree it doesn't mean that I don't recognize the expertise that you devote to your submissions. You equate value for signal with fee for carriage. Forget about the terminologies.
To me they are totally different concepts. BDUs, you are distributing and that's what you should pay for it. It's sort of I look at it a little bit like when we do in 9 1 h , you know. We say this is a program. We feel it is of value, Canadians should receive it and this is a prize that they should get. And you sell it, BDUs and obviously you prepare your customers. I'm just saying, look, you two are in a symbiotic relationship. There are all sorts of things you do for each other.
You need each other. You depend on each other and you should have a negotiation for the whole ball of wax. I don't understand why the conventional system isn't part of it. I am sure you listened to it and make it as broad or as narrow as possible. I live that up to your fertile imagination. Most likely -- I can't imagine why it wouldn't unless you know there is something that would -- is directed at harming consumers or something. For me it's not at all. This is a completely different hearing. Chairman, in this opening statement when we use value for signal we use it in a way that you understand it.
BIBIC: When we use fee for carriage in this opening statement, which we do in two or three cases, we use fee for carriage in the way it was understood prior to this debate. BIBIC: I do have a disagreement with you in the sense that I think that at the end of the day it's the same thing reached through a different process. But rather than get into that debate with you, the fundamental problem that we have with either model -- but let's focus now on value for signal as this is what this is about.
The issue is that if the Commission comes out with a decision that says value for signal is appropriate, go negotiate, what the Commission has in effect done is that it has declared that there is an additional right for compensation that the broadcasters have for their conventional signals. You may say go figure out what the payment is going to be.
It can be in kind. It can be zero. It can be something. But ultimately what the decision is that there is a right.
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